Aug 21, 2018

94 Percent of Jobs Created In the Last Decade Are Not Traditional. Tech Is Not the Only Reason

Is tech the cause, or the result. Or some of both? JL

Louis Hyman comments in the New York Times:

In the last 10 years, 94% of new jobs have appeared outside
of traditional employment. One-third of workers,
and half of young workers, participate in this alternative world. Technology is
thought to be responsible for disrupting traditional work. But the history of labor shows social change is driven by decisions we make about how to organize our world. Only later does technology accelerate and consolidate those changes.

When we learn about the Industrial Revolution in school, we hear a lot about factories, steam engines, maybe the power loom. We are taught that technological innovation drove social change and radically reshaped the world of work.

Likewise, when we talk about today’s economy, we focus on smartphones, artificial intelligence, apps. Here, too, the inexorable march of technology is thought to be responsible for disrupting traditional work, phasing out the employee with a regular wage or salary and phasing in independent contractors, consultants, temps and freelancers — the so-called gig economy.

But this narrative is wrong. The history of labor shows that technology does not usually drive social change. On the contrary, social change is typically driven by decisions we make about how to organize our world. Only later does technology swoop in, accelerating and consolidating those changes.

This insight is crucial for anyone concerned about the insecurity and other shortcomings of the gig economy. For it reminds us that far from being an unavoidable consequence of technological progress, the nature of work always remains a matter of social choice. It is not a result of an algorithm; it is a collection of decisions by corporations and policymakers.

Consider the Industrial Revolution. Well before it took place, in the 19th century, another revolution in work occurred in the 18th century, which historians call the “industrious revolution.” Before this revolution, people worked where they lived, perhaps at a farm or a shop. The manufacturing of textiles, for example, relied on networks of independent farmers who spun fibers and wove cloth. They worked on their own; they were not employees.

In the industrious revolution, however, manufacturers gathered workers under one roof, where the labor could be divided and supervised. For the first time on a large scale, home life and work life were separated. People no longer controlled how they worked, and they received a wage instead of sharing directly in the profits of their efforts.

This was a necessary precondition for the Industrial Revolution. While factory technology would consolidate this development, the creation of factory technology was possible only because people’s relationship to work had already changed. A power loom would have served no purpose for networks of farmers making cloth at home.

The same goes for today’s digital revolution. While often described as a second machine age, our current historical moment is better understood as a second industrious revolution. It has been underway for at least 40 years, encompassing the collapse, since the 1970s, of the relatively secure wage-work economy of the postwar era — and the rise of post-industrialism and the service economy.

Over these four decades we have seen an increase in the use of day laborers, office temps, management consultants, contract assemblers, adjunct professors, Blackwater mercenaries and every other kind of worker filing an I.R.S. form 1099. These jobs span the income ranks, but they share what all work seems to have in common in the post-1970s economy: They are temporary and insecure.

In the last 10 years, 94 percent of net new jobs have appeared outside of traditional employment. Already approximately one-third of workers, and half of young workers, participate in this alternative world of work, either as a primary or a supplementary source of income.

Internet technologies have certainly intensified this development (even though most freelancers remain offline). But services like Uber and online freelance markets like TaskRabbit were created to take advantage of an already independent work force; they are not creating it. Their technology is solving the business and consumer problems of an already insecure work world. Uber is a symptom, not a cause.

It’s worth stressing that the “technology” of temp work — and the possibility of replacing entire work forces with it — existed for years before corporations made the decision to start adopting it. Today’s smartphone app is an easy way to hire a temp, but is it really that much easier than picking up a phone was in 1950?

Indeed, shortly after World War II, a Milwaukee man named Elmer Winter founded Manpower, the first major temp agency, to supply emergency secretaries. But by the end of the ’50s, Winter had concluded that the future growth of Manpower was in replacing entire work forces. He was uniquely positioned to teach corporate America how to reduce its work forces, since nearly all of the Fortune 500 companies used his services, and he tried to do so.

But persuading companies to abandon how they operated was easier said than done, even though Winter could readily demonstrate that it would be cheaper. Few companies took him up on his offer. Higher profits were possible, but not as important, in the lingering wake of the Great Depression, as the moral compact between employer and employee.

What changed this? The emergence in the 1970s of a new, strictly financial view of corporations, a philosophy that favored stock and bond prices over production, of short-term gains over long-term investment. Theories of “lean” corporate organization became popular, especially those sold by management consultants and business gurus.

Big corporations had always had their critics, but no one before the ’70s would have thought that smaller companies would be better run than large ones. Large companies had resources, economies of scale, professional managers, lots of options. Yet terms like “small” and “efficient” and “flexible” would come to seem like synonyms. And with the rise of the lean corporation, work forces became expendable and jobs more precarious.

I am neither for nor against temping (or consulting, or freelancing). If this emergent flexible economy were all bad or all good, there would be no need to make a choice about it. For some, the rise of the gig economy represents liberation from the stifled world of corporate America.

But for the vast majority of workers, the “freedom” of the gig economy is just the freedom to be afraid. It is the severing of obligations between businesses and employees. It is the collapse of the protections that the people of the United States, in our laws and our customs, once fought hard to enshrine.

We can’t turn back the clock, but neither is job insecurity inevitable. Just as the postwar period managed to make industrialization benefit industrial workers, we need to create new norms, institutions and policies that make digitization benefit today’s workers. Pundits have offered many paths forward — “portable” benefits, universal basic income, worker reclassification — but regardless of the option, the important thing to remember is that we do have a choice.

Insecurity is not the inevitable cost of technological progress. Only by understanding that fact can we act to make capitalism work for us, not work us over.

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As a Partner and Co-Founder of Predictiv and PredictivAsia, Jon specializes in management performance and organizational effectiveness for both domestic and international clients. He is an editor and author whose works include Invisible Advantage: How Intangilbles are Driving Business Performance.Learn more...